Tax Increases Alone Won't Solve Inequality

By Evan Soltas -
Apr 2, 2013

Inequality has many dimensions. Taxes deal with just one: incomes. Reducing income inequality through taxes and subsidies is worthwhile, of course, and programs like the earned-income tax credit deserve support. Yet many other forms of inequality go unaddressed. If we're worried about social division more broadly, these other aspects shouldn't be ignored.

Inequality isn't just about incomes. It's multidimensional, environmental and intergenerational.

Consider educational attainment. If your father didn't graduate from high school, you are eight times more likely to be a dropout than if he did (see this recent post). If your father finished college, you are three times more likely to graduate from college yourself.

Democrats tend to worry more about inequality of every kind than Republicans, but they concentrate too much on incomes. President Barack Obama's re-election campaign talked extensively about inequality, but with an intense focus on taxes. His most recent State of the Union address came closer to a broader view of inequality, especially in his call for universal primary education. On the whole, though, the inequality debate is far too narrow.

In a sense this is understandable. Government can redistribute income, but it can't redistribute fathers. Yet government is not helpless. Public policy has a huge influence on multidimensional inequality -- though we see it most clearly when things go wrong. TheAnti-Drug Abuse Act of 1986, reformed in 2010, led to a roughly tenfold increase in the number of adults incarcerated for drug-law violations. The social damage was immense.

There's an optimistic way to look at that history, though. Government could achieve a lot simply by making fewer gross errors of that sort. If government can't redistribute fathers, it can reform policies that, in one way or another, drive many away from responsible fatherhood. Criminal-justice reform and education reform may be the most powerful anti-inequality weapons.

Rehabilitation without incarceration is the right policy for non-violent drug offenders, as New Jersey Governor Chris Christie has proposed. "Swift and certain" sanctions for most crimes would also achieve sweeping reductions in recidivism, as Mark A.R. Kleiman has written. These are just two possibilities.

Opportunities also abound at the frontier of education policy. The U.K. is giving schools more independence. Researchers are finding better ways to track teacher performance. And in the U.S., mayors are proving themselves better than school boards at allocating education resources.